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26 June 2014

An Aereoeqsue Business Model in India

(Unedited first draft with some nuance being sacrificed for brevity and, hopefully, clarity. This is based on the understanding that no licences are obtained from either broadcasters or other copyright owners for the employment of the Aereoesque business model.)

The decision of the US Supreme Court in the case of American Broadcasting Cos. v. Aereo, Inc. decided on June 25, 2014, (i.e. the ‘Aereo case’) appears to have been causing considerable anguish in India for fear of the implications the decision could have in India, and the possibly devastating effect it could have on businesses dealing with cloud computing technology. Without getting into the merits of the decision with reference to US law at all, this post attempts to consider how a case with a similar factual matrix would likely unfold in India exclusively from the point of view of Indian copyright law. In doing so, it relies on the description of Aereo’s product/service provided on the first and second pages of the judgment in the Aereo case.

"For a monthly fee, Aereo offers subscribers broadcast television programming over the Internet, virtually as the programming is being broadcast. Much of this programming is made up of copyrighted works. Aereo neither owns the copyright in those works nor holds a license from the copyright owners to perform those works publicly.

Aereo’s system is made up of servers, transcoders, and thousands of dime-sized antennas housed in a central warehouse. It works roughly as follows: First, when asubscriber wants to watch a show that is currently being broadcast, he visits Aereo’s website and selects, from a list of the local programming, the show he wishes to see.

Second, one of Aereo’s servers selects an antenna, which it dedicates to the use of that subscriber (and that subscriber alone) for the duration of the selected show. A server then tunes the antenna to the over-the-air broadcast carrying the show. The antenna begins to receive the broadcast, and an Aereo transcoder translates the signals received into data that can be transmitted over the Internet.

Third, rather than directly send the data to the subscriber, a server saves the data in a subscriber-specific folder on Aereo’s hard drive. In other words, Aereo’s system creates a subscriber-specific copy—that is, a “personal” copy—of the subscriber’s program of choice.

Fourth, once several seconds of programming have been saved, Aereo’s server begins to stream the saved copy of the show to the subscriber over the Internet. (The subscriber may instead direct Aereo to stream the program ata later time, but that aspect of Aereo’s service is not before us.) The subscriber can watch the streamed program on the screen of his personal computer, tablet, smart phone, Internet-connected television, or other Internet-connected device. The streaming continues, a mere few seconds behind the over-the-air broadcast, until the subscriber has received the entire show. [....]

Aereo emphasizes that the data that its system streams to each subscriber are the data from his own personal copy, made from the broadcast signals received by the particular antenna allotted to him. Its system does not transmit data saved in one subscriber’s folder to any other subscriber. When two subscribers wish to watch the same program, Aereo’s system activates two separate antennas and saves two separate copies of the program in two separate folders. It then streams the show to the subscribers through two separate transmissions—each from the subscriber’s personal copy."

[Emphasis added in the extract.]

Assuming that the same business model were employed in India by, say, an Aereoesque company, from the point of view of Indian copyright law, it would appear that there is scarcely a step along the way that may not have adverse copyright implications for the Aereoesque company.

First things first: copyright in a work and copyright in a broadcast are two different rights (or, more accurately, two different bundles of rights), and the exploitation of the rights in a broadcast involves the exploitation of the rights in not only the broadcast itself but also the exploitation of rights in the content underlying or contained within the broadcast (such as cinematograph films). As such, there could potentially be two sets of ‘complainants’ should broadcasts be used without authorisation: the rights owners of the underlying works, and the rights owners of the broadcasts themselves. There is absolutely nothing in the copyright statute which states that the rights in works underlying broadcasts are automatically and necessarily subsumed in a broadcast. In other words, it could be argued that the third-party exploitation of a broadcast would require a licence from not only the broadcaster but also the owner(s) of the underlying works.

For the sake of simplicity in this post, the underlying works in broadcasts have been limited to cinematograph films. Under Section 14(d) of the Copyright Act, those who own the rights in films may exclusively do or authorise the doing of certain specified acts:

"(d) in the case of a cinematograph film,—

(i) to make a copy of the film, including —

(A) a photograph of any image forming part thereof; or (B) storing of it in any medium by electronic or other means;

(ii) to sell or give on commercial rental or offer for sale or for such rental, any copy of the film; (iii) to communicate the film to the public;"

And in the case of broadcasts, 'rights' are defined in a proscriptive manner in Section 37 of the Copyright Act as follows:

"During the continuance of a broadcast reproduction right in relation to any broadcast, any person who, without the licence of the owner of the right does any of the following acts of the broadcast or any substantial part thereof,—

(a) re-broadcasts the broadcast; or (b) causes the broadcast to be heard or seen by the public on payment of any charges; or (c) makes any sound recording or visual recording of the broadcast; or (d) makes any reproduction of such sound recording or visual recording where such initial recording was done without licence or, where it was licensed, for any purpose not envisaged by such licence; or (e) sells or gives on commercial rental or offer for sale or for such rental, any such sound recording or visual recording referred to in clause (c) or clause (d)."

The easiest way to assess whether the employment of an Aereoesque model would, under Indian copyright law, be likely to attract liability for copyright infringement would probably be to first check whether it would prima facie be likely to violate either Section 14 or Section 37 of the Copyright Act, and then go on to attempt to assess, if it does, the likelihood of the possible violations falling into one of the statutory exceptions to copyright infringement contained in either Section 52 or Section 39 of the Copyright Act.

On the face of it, it would appear that if a company were to use an Aereoesque business model in India, it would violate rights in both Sections 14 and 37 of the Copyright Act simply because:

much of the programming accessible to subscribers would comprise copyrighted works to which the Aereoesque company had no rights, and consequently no right to exploit; and

the Aereoesque company would likely play an active role in ensuring that subscribers had access to such copyrighted content (as opposed to, say, simply selling hardware to subscribers and leaving them to figure out how to gain access on their own, so to speak).

However, despite the fact of a possible prima facie violation of copyright, what is critical to note is that none of the rights contemplated by either Section 14 or Section 37 are absolute (as indicated earlier): the rights are limited by exceptions to copyright infringement contained in Section 52 of the statute and, in the case of broadcasts, in Section 39 as well.

In this regard:

Considering that the Aereoesque company would provide (on its website) a list of programming for subscribers to choose to access, it could be argued that no potentially infringing access to content by subscribers would be ‘unintentional’ on the part of the company. As such, it could also be argued that even if some of Aereoesque company's acts fell within the scope of Section 52(1)(b) of the Copyright Act (which allows ‘the transient or incidental storage of a work or performance purely in the technical process of electronic transmission or communication to the public’), the company would merit no protection as an intermediary under Section 52(1)(c) of the Copyright Act which (along with a proviso detailing a notice and take down procedure) states that the following is an exception to copyright infringement:

"transient or incidental storage of a work or performance for the purpose of providing electronic links, access or integration, where such links, access or integration has not been expressly prohibited by the right holder, unless the person responsible is aware or has reasonable grounds for believing that such storage is of an infringing copy"

The company possibly not meriting protection under Section 52(1)(c) of the Copyright Act could simply be because, having chosen which content to make available, it would probably not be able to sustain the arguments (if it were to attempt to make them) that alleged infringement was unintentional, or that alleged infringement was by subscribers alone, or some combination of the two arguements.

Further, once subscribers had chosen what to watch, a server would save the data in subscriber-specific folders on the Aereoesque company's hard drive. Interestingly enough, in this regard, the Copyright Act does allow for the making of ephemeral copies by broadcasting organisations but this hinges on the broadcasting organisations having the right to broadcast the relevant works in the first place (which latter right, not having obtained a licence, the Aereoesque company would not have).

The relevant provision in Section 52(1)(z) of the Copyright Act treats as an exception to copyright infringement:

"the making of an ephemeral recording, by a broadcasting organisation using its own facilities for its own broadcast by a broadcasting organisation of a work which it has the right to broadcast; [....]"

This exception though, of course, brings up the question of whether the Aereoesque company would be a broadcasting organisation at all; there is no definition of a ‘broadcasting organisation’ in the Copyright Act, but it would be reasonable to suppose that an organisation which engages in broadcasting would be considered to be one. Unfortunately, the Act does not contain a definition of ‘broadcasting’ either, and so one is forced to rely on the definition of ‘broadcast’ (which in turn relies on the definition of ‘communication to the public’) in Section 2 of the Copyright Act:

"2(dd) "broadcast" means communication to the public —
(i) by any means of wireless diffusion, whether in any one or more of the forms of signs, sounds or visual images; or
(ii) by wire, and includes a re-broadcast;"

"2(ff) "communication to the public" means making any work or performance available for being seen or heard or otherwise enjoyed by the public directly or by any means of display or diffusion other than by issuing physical copies of it, whether simultaneously or at places and times chosen individually, regardless of whether any member of the public actually sees, hears or otherwise enjoys the work or performance so made available.

Explanation. — For the purposes of this clause, communication through satellite or cable or any other means of simultaneous communication to more than one household or place of residence including residential rooms of any hotel or hostel shall be deemed to be communication to the public;"

Looking at these definitions, it would appear to be clear on the face of it that the Aereoesque company would in fact engage in re-broadcasting broadcasts (i.e. in broadcasting), and in communicating, without authorisation, works to the public. The inclusion of the word ‘individually’ in the definition of ‘communication to the public’ makes it crystal clear that it is still ‘communication to the public’ if only one person is communicated to.

As for the making of copies of broadcasts which the Aereoesque company would engage in on subscriber-specific folders, Section 39 of the Act does allow this to be done, but only if ‘the making of any sound recording or visual recording [is] for the private use of the person making such recording, or solely for purposes of bona fide teaching or research’. While it may be argued that it is subscribers who makes recordings for themselves, it would probably be more accurate to suggest that the Aereoesque company would make the recording for subscribers at their behest. If this were indeed founf to be the case, it is unlikely that the exception to infringement contained in Section 39 of the Copyright Act would apply.

Considering how active the role of the Aereoesque company would be, it is likely that the company would be considered to provide a service and not merely a product. And it appears that it would not be especially difficult to argue that the provision of its service violated the rights subsisting in both the works underlying broadcasts, and the broadcasts themselves. As such, there is a strong possibility that, should an Aereoesque service be offered in India, it would require licences to function legally.

That said, the impression provided by the Aereo case itself is probably comparable to the one which the Napster series of cases once provided, and could conceivably leave one with the expectation of technology subtly changing over time and copyright law playing catch up...It wouldn't be entirely surprising if the Aereo case were to mark the beginning of an era where a series of events similar to one seen in the file-sharing cases unfolds, this time in relation to broadcasts and the works underlying them.

There is little doubt that we live in copyright maximalist times. Nonetheless, focussing on India alone, Indian copyright law has (arguably) been built on the notion of balancing the rights of owners and the interests of consumers, as can be seen, for example, in Section 52(1)(zc) of the Copyright Act which supports the Trade Marks Act of 1999 by preventing rights owners from using copyright claims to subvert the international exhaustion of rights envisaged by trade mark law.

Most of the exceptions to copyright infringement in Indian law do pertain to private use or areas where there are strong public policy arguments to be made against copyright enforcement (such as to promote education, review, criticism, cultural activity, and access to law). That said, the exceptions to infringement are also cognisant of business requirements; apart from Section 52(1)(zc) of the Copyright Act (mentioned earlier), the statute also, for example, contains a safe harbour for the benefit of intermediaries in Sections 52(1)(b) and (c), and in Section 52(1)(w), it contains a provision which allows the making of a 3D object from a 2D artistic work, such as a technical drawing, for industrial application of any purely functional part of a useful device.

The business-friendly exceptions to copyright infringement though largely cater to what could be seen as business necessity, and do not facilitate the intentional infringement of copyright by businesses profiting (arguably) at the expense of other businesses (even if only with reference to opportunity cost).

There is quite simply no argument to be made that Indian copyright law was ever intended to allow any business to 'free ride' on other businesses by exploiting their content. And there certainly is no evidence to indicate that it intended to create an ecosystem where businesses employing so-called ‘new technologies’ would be able to exploit third party content without authorisation.

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